FAO/GIEWS
- Food Outlook No. 3, June 1998 Page 7

CARRYOVER STOCKS

The forecast for cereal carryovers for crop years ending in 1998
has been raised by almost 20 million tonnes since the previous report to
321 million tonnes, 25 million tonnes, or 8 percent, above the opening
volume. This reflects mainly lower feed demand in China, some countries
affected by the Asian financial crisis and in the United States, resulting
in higher carryovers than earlier anticipated (by over 10 million tonnes
more in the United States alone).

Accordingly, the ratio of global end-of season stocks to expected utilization
in 1998/99 is now expected to reach 16.9 percent, one percentage point
higher than anticipated in the previous report. At the current forecast
level, total cereal carryovers held by major exporters would rise for the
second consecutive year, approaching 39 percent of the world total, as
compared to 34 percent at the beginning of the season and only 28 percent
in 1996. By contrast, cereal stocks held by other countries, particularly
the developing countries, are expected to remain unchanged from the previous
year.

The forecast for wheat stocks for crop years ending in 1998 has
been revised upwards by 8 million tonnes to 134 million tonnes, 19 million
tonnes, or 17 percent higher than their opening level. Most of this month's
revisions reflect the adjustments to carryovers in China where lower domestic
utilization combined with a slight upward revision of production would
result in bigger carryovers than estimated previously. Among the major
exporters, wheat stocks are anticipated to rise despite a decline in their
aggregate production. Most of the increase would be on account of the anticipated
decline in wheat utilization, especially for feed, and lower exports. The
forecast for world coarse grains stocks for crop years ending in
1998 has also been raised, by over 11 million tonnes, to 134 million tonnes,
some 8 million tonnes, or 7 percent, above their opening levels. This month's
significant increase in the size of carryovers mainly reflects an unexpected
downward revision in the estimates of maize export estimates and domestic
utilization in the United States, which, according to the latest official
reports, are smaller than earlier anticipated. In the EC, the estimate
of total coarse grain stocks at the end of the season is almost unchanged
at 25 million tonnes, up 10 million tonnes from their opening levels. Large
quantities of EC barley are expected to be held in intervention stocks
for the first time in almost five years.

WORLD CARRYOVER STOCKS OF CEREALS

Crop year ending in:

1997

1998 estim.

1999 f'cast

(. . . . million tonnes . . . .)

Wheat

114.6

133.9

136.0

Coarse grains

125.3

133.8

138.7

Rice (milled)

56.5

53.7

53.0

TOTAL

296.5

321.5

327.7

of which:

Main exporters

101.2

126.0

139.0

Others

195.3

195.5

188.7

SOURCE: FAO

In contrast to the forecast of rising stocks of the other major cereals,
global rice stocks at the end of the marketing seasons in 1998 are
forecast by FAO to fall to some 54 million tonnes, about 5 percent below
their opening levels. All of the projected decline would be in developing
countries, especially Indonesia, the Philippines and Brazil where the 1997
and/or 1998 paddy outputs were affected by El Niño. A reduction
in stocks is also expected in India and Pakistan due to the anticipated
increase in exports. By contrast, stocks in China (mainland) are forecast
to expand for the second consecutive year reflecting bumper harvests in
recent years.

Early indications suggest that world cereal carryovers could rise for
the third consecutive year in 1999 and reach 328 million tonnes, up about
6 million tonnes, or 2 percent, from the current season. Thus, for the
first time in four years, the global stock-to-utilization ratio could return
within the 17-18 percent range considered by the FAO Secretariat as the
minimum necessary to safeguard world food security. This assumes that current
forecast levels of 1998 cereal production and 1998/99 utilization materialize.
At present these indicate that world cereal production would exceed global
utilization in 1998/99, thus allowing for some further increase in stocks,
especially among the major exporters.